Sales tax on discarded newspapers and damaged newsprint fails where the seller is not trading in those commodities.

Sales of old newspapers and damaged newsprint were not liable to sales tax because the assessee was not carrying on business in those commodities themselves. Liability depended on whether the goods sold could be treated as by-products or subsidiary products of the business and whether an intention to deal in them could reasonably be attributed to the assessee. Damaged newsprint was treated as spoiled or wasted raw material, not a product of the printing business, and old newspapers were either outside the definition of goods or, if treated as discarded paper, still not by-products of the business. The sales were therefore not taxable under the Bombay Sales Tax Act, 1959.

---

---

Issues: Whether the sales of old newspapers and damaged newsprint by the assessee were effected in the regular course of business and were therefore liable to sales tax under the Bombay Sales Tax Act, 1959.

Analysis: Liability to tax depended on whether the assessee was carrying on business in those very commodities, not merely whether the sales were frequent or yielded revenue. The relevant test was whether the goods sold could be regarded as by-products or subsidiary products of the assessee's business, and whether an intention to deal in them could reasonably be attributed to the assessee. Damaged newsprint was treated as spoiled or wasted raw material, more akin to unserviceable goods than to a product emerging from the printing business, and there was no basis to infer an intention to trade in it. Old newspapers were either newspapers excluded from the definition of goods or, if treated as unsold discarded paper, likewise not by-products or subsidiary products of the business.

Conclusion: The sales of old newspapers and damaged newsprint were not taxable, and the question referred was answered in the affirmative in favour of the assessee.

---